Critically Evaluate the Impact of Globalization on Management Control System

2052 Words Apr 12th, 2011 9 Pages
Critically Evaluate the Impact of Globalization on Management Control System

Management control is the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organization’s objectives (Berry, Broadbent & Otley 1995). The purpose of a management control system is to encourage managers to take actions that are in the best interest of the company. Technically, this purpose can be described as goal congruence. It is also ensure the strategy of the organization is reflected in the tasks carried out. It is the process by which managers of all levels ensure that the people they supervise implement their intended strategies’ (Anthony and Govindarajan, 2004).

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The interdependence of national economies is becoming stronger and stronger. For some countries their dependence on foreign trade is more than 30% and very few countries could reach 50% -60%. In this circumstance, the international economic fluctuations and crises have become recurrent infection and are inevitable, such as the Southeast Asia Financial Crisis in 1997 and American Subprime Crisis in 2008. Moreover, the global wealth gap is widening. In the process of globalization, competition increases efficiency, but at the meanwhile also increases the wealth centralized in a few countries or minority interest groups. According to World Bank statistics, in 1983, the per capita GDP in low-income developing countries is only 2.4% of that in high-income developed countries, that is to say the latter is equal to the former 43 times and to 1994, this proportion decreased to 1.6%, or 62 times of the former. Even worse, the inundation by foreign industries drives local businesses out of the market and renders vast number of professionals become employed. So in a world held to be rapidly changing and where globalised threats are not easy to recognize and respond to, we need to look internally to our capacities to adapt to the exigencies of an unknown and constantly threatening world.

Along with the globalization, there are increasingly numbers of companies change their original operating ideas and come into a concept called international operating. Their
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